Workers' comp reform/24-hour coverage may provide opportunities for your practice.

In an attempt to reduce employers' costs, 24-hour coverage is combining workers' compensation insurance with the employee benefit coverage. 24-hour coverage has gained viability and support as state legislators and employers have gone on the offensive to curb the rapid escalation in the cost of medical and hospital services.

Supporters of 24-hour coverage mainly cite the economic factors which focus on additional effort spent on management of workers' compensation claims. One important advantage to an employer is that the cost management techniques of the employee benefit side such as audits, PPO's utilization review and recertification could be implemented in the workers' compensation area. However, the most important factor, according to legislators, is that employers would have control of the patients' choice of physicians. An employer could therefore direct care to physicians within a network of doctors with whom the employer has previously negotiated for discounted and managed delivery of medical care. With the understanding that fraud and litigation are also a cause of the increase in costs, the managed care scenario may avoid a large portion of the potential claims through litigation by eliminating the alternative to use providers that engage in workers' compensation abuse. Also cited are the potential administrative savings and structural efficiencies that may occur as a result of integrating two complicated systems that have gaps and overlaps.

If the predicted savings are realized, this would reduce a physician's workers' compensation premiums. Also, as physician groups increase in size, the potential for workers' compensation premium savings also increases. Experts say that up to 75% of all property/casualty losses stem from workers' compensation. According to FHP, 52% of workers' compensation claim dollars in 1992 went toward medical benefits.

Another advantage is that 24-hour coverage will allow one physician or group of physicians to provide all services for a particular patient regardless of where the injury or illness occurred.

The doctor/patient relationship and the quality of care delivered is expected to improve as the funding of the product becomes secondary and transparent to the patient.

The barriers to the establishment of 24-hour coverage are institutional and regulatory. In California, for example, there are significant barriers in the form of legislation. Currently, California workers' compensation law allows management or "control" of a patient's access to providers for a 30-day period.

Legislators contend that it is very difficult to combine employee benefits with coverage that has historically been "no-fault." Because workers' compensation benefits have always been provided without regard to fault, no penalties or controls should be forced upon the patient. Legislators also feel that the combination of the two products is hampered because they want to protect the exclusive remedy provision in the workers' compensation act. This provision states that employees must "give up their right" to sue the employer in exchange for a guarantee of what has been a high level of unmanaged medical and disability benefits.

A number of states have begun to implement managed care strategies in their workers' compensation laws.

Legislation in California (Senate Bill 30 and Assembly Bill 110 effective August 1994) is expected to make sweeping changes to the workers' compensation system. Both bills will, through the development and implementation of HCOs (Health Care Organizations), allow greater control of provider access and patient behavior. Physician groups will form HCOs in a similar fashion to the structure of HMOs. Physician groups that participate would thus be able to capitalize significantly on the increased service requirements and patient flow that is now unmanaged.

If a physician is a member of an HCO or is already providing care in a managed care setting, there is a potential for significant increase in patient flow. Additional business can be attained by not referring patients to occupational physicians. Instead, those patients could be treated as any other patient would be. Some physicians that participate in the managed care networks of Blue Cross and PacifiCare already treat both occupational and non-occupational patients in an HMO setting.

As the interest in 24-hour coverage increases and legislators move in the direction of managed care in the workers' compensation arena, physicians can take advantage of reductions in operating costs and the potential for increased business through greater managed care patient flow.

Experts say physicians can also look forward to a day not far away when all care will be delivered to a patient, regardless of whether the injury was work-related or not, through the same physician group with one funding system.

Scott Boring is assistant vice president for Johnson and Higgins.